WHITE PAPER
Your Experience Platform:
Gain Actionable Insight
Oracle Retail
CrossTalk
Make smarter strategic and tactical decisions that differentiate your brand.
RETAIL
Your Experience Platform: Gain Actionable Insight
Make smarter strategic and tactical decisions that differentiate your brand.
Oracle Retail
CrossTalk
RETAIL
retailers are realizing an
increased sense of urgency to
unlock the secrets of big data,
fueled by the revolution in
retail from a focus on product
to a focus on the consumer.
The explosive growth in the amount of data collected by and available to
retailers has created something of a conundrum. In the not-too-distant
past, a retailer simply had store-level sales data, from which virtually all
planning decisions were made. Today, retailers—from grocery to fashion
retailers—are bombarded with data that, with the right tools, can help
them gain actionable insight into shoppers’ behavior across channels.
With this insight, retailers can accurately measure consumer interest in
specific merchandise and apply that knowledge from one channel to the
next, thoroughly understand the implications of promotions on specific
customers and customer segments, price on product performance, plan
channel-specific assortments accordingly, and coordinate the supply chain
processes that ensure execution of the cross channel plan.
Collection of the information that enables this understanding has been
facilitated by advances in technology, to the point that today, information
is gathered with every click of a mouse, swipe of a card, fulfillment of an
order and issuance of a receipt. Despite this technology and data explosion,
retailers are struggling to understand how to find the information in the
data that will help them make better cross channel retailing decisions and
differentiate themselves. How can these mountains of data be transformed
into actionable information, and what are the right tools to help them meet
this challenge?
Retailers are realizing an increased sense of urgency to unlock the secrets
of big data, fueled by the revolution in retail from a focus on product
to a focus on the consumer. When decisions were made based solely
on historical sales and price, life was relatively easy. Now, competitive
retailers are consumer-centric, and consumer-centricity adds a dynamic
to the planning equation that requires insight into not only transactional
data, but household panel data, plus demographic and syndicated third
party market data as well. Consumer-centric retailers must accurately
measure demand by monitoring not just what was sold, but what could
have sold; not just what was bought, but what was searched; not just that it
was searched, but why it was searched, when it was searched, and who did
the searching. They must measure fulfillment of demand, within their
brand and within the market at large. And they must analyze new sources
of data, such as brand and product perception on the Web and in social
mediums.
New realities are forcing change on retail operators, to the point that those
who manage business the old way—based on averages and assumptions—
will no longer be competitive. Future retail winners will gain insight
from past performance, and they’ll project that forward to affect customer,
assortment, price, and promotion decisions.
ConnECtEd IntErACtIons CrEAtE dAtA trEAsurEs
As cross channel consumerism continues to account for a growing
percentage of shopping activity and retail sales, merchants are
accumulating incrementally larger and richer volumes of data than ever
before. Unfortunately, they’re all too often failing to connect the data dots
across channels. Many retailers had created separate teams to launch their
online businesses, or have grown these capabilities out of a catalog or call
center business model. Disparate systems often support these channels;
systems that may not even be able to recognize when the same item is
being sold across multiple channels due to separate item listing processes,
separate buying teams, separate pricing processes, and separate reporting
and analysis. Customers shopping across channels, however, will recognize
that the items are the same and question why they are not priced the same,
why they cannot return the item they bought online to the store, etc.
Creating connections among cross channel data promises big rewards in
the form of greater insight into customer behavior and provision of a far
superior customer experience.
Social media is another new source of data that drives actionable insight.
Social mediums are being leveraged by leading retailers not just to
communicate with customers, but to understand them as well. While
social mediums can provide invaluable insight that contributes to a
retailer’s more traditional data sources, most merchants lack the tools to
gather and make use of the terabytes of consumer intelligence harbored in
social mediums.
To create competitive differentiation and increase wallet share, retailers
need to gain insight into these richer, more voluminous sources of data
and combine that insight with intelligence from traditional data sources
to drive day-to-day customer, product, planning and pricing decisions.
Without actionable insight, based on accurate data derived from connected
interactions, merchants are left to unproven and non-scientific decision
making, which doesn’t facilitate effective targeted consumer promotions,
accurate planning, consistent pricing, and sound merchandising decisionmaking. Consider the following pitfalls:
• Experience and intuition-based decision-making
Relying on key individuals within the organization, their experience,
and their interpretation of historical data to make forward-looking
decisions is not an option. Too much valuable data lies beneath the
surface, invisible to planners without modern tools.
• Managing to averages
Retailers will limit their improvement by making assumptions based
on high-level data, and then planning at that high level based on those
assumptions. Insight into the rich and granular data that exists “below
the surface” will drive optimized performance and profitable growth.
• Inefficient data analysis
Time spent gathering huge volumes of data, determining its value,
and trying to define generalities from it results in a lack of agility and
slow responsiveness to consumer and sales trends. Modern, scientific
tools replace time spent mining and analyzing with time spent making
meaningful decisions.
• Lack of fact-based planning
The “future view” of customer demand cannot be based solely on
backward-looking personal interpretation of historical data. Historical
data must be supplemented with a fact-based understanding of future
consumer demand and the factors that drive that demand.
• Inability to access and derive insight from new data sources
New data sources such as those mentioned previously hold untold value
that extends your intelligence well beyond the POS, but they can’t
be mined with traditional data tools. Ill-equipped retailers are left to
making anecdotal assumptions to support decision making, rather than
leveraging modern analytical tools that offer accurate, actionable insight.
Traditional approaches to retail planning only paint a small part of the
picture in today’s digitally driven world of commerce. For a holistic view
of customers and demand, a new approach is in order.
traditional approaches
to retail planning
only paint a small part of the picture in
today’s digitally driven world
of commerce.
Case study:
With more than 1,400 stores across the US, UK,
Canada, and 41 other countries, Aldo has quickly
become a venerable, worldwide brand in high-end
footwear. With that growth, however, has come
significant challenge. Aldo was experiencing:
• Deteriorating margins due to a broad-brush
approach to markdowns and the cost of transfer­
ring merchandise from region to region
• Aged inventory due to buyers holding on to
assortments too long
• Intuitive decision-making at assortment and
exit strategies for new markets
• A rigid, non-responsive legacy markdown
process
• Difficulty keeping up with store and market
growth
Aldo Group CFO Bob Raven laid down the challenge
to significantly increase the overall profitability
of the Aldo Group by implementing a tool that
would support a more effective and profitable use
of merchandise based on life cycle management
concepts at the price zone level. Aldo immediately
implemented Oracle’s Retail Merchandise System,
followed by the Oracle Retail Markdown Optimiza­
tion solution. The improvements Mr. Raven sought
came quickly in the form of:
• Improved sell-thru of each assortment, resulting
in improved margin and inventory turn
• Smoother transition to new assortments on a
quarterly basis
• Fewer space/capacity issues in stores
• Better lift with effective price ladders
• More frequent markdowns, from monthly to
biweekly
In addition, decision support tools within the
Oracle systems helped Aldo support organizational
and process changes by enabling visibility and
analysis at a deeper level of detail than previously
possible. This analysis facilitated the adoption of
accurate new pricing policies, enabling more—and
more frequent—pricing options. With these new
decision support tools saving time, merchants have
more capacity to focus on strategic tasks.
The implementation has not only improved
merchandise operations at Aldo, it has pleased
Mr. Raven. “We refer to Oracle Retail Markdown
Optimization as ‘Margin Optimization,’” he said.
“This is a testament to the overarching benefits of
the solution.”
How ACtIonAblE InsIGHt EnAblEs ConnECtEd
IntErACtIons And oPtImIzEd oPErAtIons
To drive ongoing profitable growth, you must facilitate exceptional
consumer interactions, whether online, in stores, in print or on the go.
Your team needs to be empowered with actionable insights gained from
connected interactions to make smarter internal decisions—from the far
reaches of the supply chain to store operations to customer service. This is
paramount to today’s retailer. You need to build an experience platform—
tuned to your specific business strategy and growth objectives. To enable
your experience platform, we believe there are three goals:
• Connect Interactions. Using technology, connect customer and
associate interactions seamlessly across channels and touch points.
• Gain Actionable Insight. Enable smarter decisions by connecting
siloed sources of data and embedding science and analytics. This will
enable smarter customer, planning, forecasting, merchandising, supply
chain management, and marketing decisions.
• Optimize Operations. Align every aspect of your business to gain
efficiencies and economies. When KPIs are aligned across departments
and channels, internal conflict is mitigated and the customer’s priorities
become your priorities.
When these goals are achieved and executed collaboratively, you will create
your experience platform that continuously connects interactions through
actionable insight to power optimized operations.
To enable smarter decisions by connecting siloed, cross channel sources
of data, retailers need to plan and manage key business metrics within
and across different channels, leverage external data to optimize decision
making, and aggregate and reconcile key business metrics with company
objectives. This is where science and business intelligence come in to
enable actionable insight.
To meet customer demand, retailers need to understand true demand
across channels, and use that understanding to drive potential within each
channel and across other channels. This insight must then be leveraged
to plan relevant components of channel demand and combine them for a
company-wide view of gross demand and sales.
Next, the optimal inventory investment must be determined in a way
that will profitably meet customer demand and sales across channels.
Again, these must be reconciled with strategic inventory investment and
inventory turn targets.
Of course, determination of optimal cross channel, customer-centric
assortments and pricing will ensure coherence of offers across all channels,
within the constraints of space and with full visibility of impact on margin
and revenue.
tHE PowEr of ACtIonAblE InsIGHt In PrACtICE
Let’s illustrate how actionable insight works in the real world by
presenting a hypothetical customer experience, made possible by execution
on consumer insight.
Emma is a 20-year-old college senior who spends most of the year residing
in her upscale college town, where she frequently shops at one of your
internationally recognized apparel stores. The store specializes in high-end
men’s and women’s wear for various occasions, including weekend wear,
sophisticated professional attire, and dress-casual items made of luxurious
fabrics. She likes the store near her college better than the one in her
hometown because it carries a better selection of clothes and accessories
that she would buy.
The store’s best customers are the several thousand college students that
descend on the town each fall, and because you know this, Emma is among
the many frequent shoppers who receive your valuable promotional offers
via e-mail and even in her school mailbox.
Emma was recently thrilled to receive a 30% discount offer on the store’s
entire line of tee shirts and cardigans, which are exactly what she most
frequently purchases from the store. When she received a follow-on
discount offer for all in-stock belts and jewelry with the purchase of a tee
shirt or cardigan, Emma was ecstatic; she always buys such accessories to
complement her favorite apparel selections.
Emma and her friends often discuss the store, and more specifically, the
fact that they all receive discount offers on merchandise that fits their
specific tastes. She recently realized that she’s not the only patron of
the store who receives a substantial discount offer on her smartphone
to celebrate her birthday. Because the store seems to know her, Emma
wouldn’t think of shopping in another of the college town’s many apparel
stores; your store always has exactly what she needs, and in the right size
and color.
From a retailer perspective, you understand the decisions that went
into creating Emma’s shopping experience. It’s not surprising that she
prefers the store in her college town because it has a different assortment
than the one in her hometown since the stores have different customer
demographics. And because you have granular insight into her purchase
history, you know that tee shirts and cardigans are among her favorite
purchases. You also know that it’s typical of Emma to buy accessories
that complement her apparel choices. She doesn’t (and shouldn’t) realize
the analysis that your brand does to bring her a seamless and customized
shopping experience.
Your store can confidently create that experience by gaining the insight
that allows you to take action on:
• The fashion trends for 20 year old females
• Last season’s merchandise history for women’s cashmere apparel
• Historical performance of specific promotions tailored for Emma and
other consumers based on segment and demographic data
• Emma’s specific buying patterns
As the example illustrates, gaining actionable insight is not a one-time,
or even once-in-a-while proposition. Maintaining the insight that drives
intelligent action requires regular review, management, and replanning of
key business metrics, ensuring trends identified in one channel or in the
wider world cross into other channels. Oracle’s planning and optimization
platform provides full cross- channel planning and management
capabilities, together with aggregation capabilities, to provide a holistic
worldview and the actionable insight that drives more profitable decision
making. And Oracle’s analytics platform, specifically designed to meet the
unique needs of retailers, provides actionable insights that enable effective
customer and merchandising decisions.
maintaining the insight that drives intelligent action requires regular review,
management, and replanning of key business metrics.
ConClusIon: ACtIonAblE InsIGHt PowErs Your
ExPErIEnCE PlAtform
Actionable Insight provides retailers with insight into customer demand
and empowers them with executable recommendations that drive revenue
and margin. Oracle Retail Solutions provide the tools to do this on a
common platform that connects interactions, creates actionable insight,
and subsequently optimizes operations.
Oracle Retail’s enterprise approach to planning ensures a coordinated
process that ties in previously disparate and channel-specific parts of the
organization and sources of data, resulting in fact-based recommendations
that support a coordinated cross channel planning process. Equally
important is the platform’s configurability, which allows planning and
processes to evolve as the retailer does, and not only keep pace with the
change but enable organizational and process change.
Actionable insight, optimized operations, and connected interactions
comprise the three pillars of your experience platform. It’s in anticipation
of the continued evolution of retailing that we developed the vision
for your experience platform, a complete cross channel retail practice
comprised of hardware and software, engineered to help retailers
successfully navigate the challenges of today and those we’ll face in
the future.
for more Information...
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offers a comprehensive collection of informative resources and
discussions around our best-in-class Retail Solutions.
www.oracleretailrack.com
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